Gas heating bills for UK households remain more than one third higher than before the energy crisis. The only credible long-term way to cut heating costs is to replace imported fossil gas with cheaper electric alternatives. With the right policy changes, the average household bill could be over £400 lower with a heat pump than with a gas boiler.
Netherlands: Homeowner saves €450 with solar-powered heating
E3G analysis finds that a typical household with an annual gas bill of £820 could reduce costs to about £375 by switching to a heat pump, provided government enables the savings potential.
Solar electricity for heating – a strong alternative to feed‑in
E3G proposes four reforms for government to reduce electric heating bills and ensure low‑carbon heating delivers reliably lower costs. These measures would particularly benefit households using less efficient forms of electric heating, as well as those with heat pumps. Households relying on direct electric heating include some of the poorest in the UK and are twice as likely as others to experience fuel poverty.
E3G
1. Remove levies from electric heating
Introduce an Affordable Electric Heating Tariff that exempts electricity used for heating from legacy policy costs. Establish a longer‑term roadmap to remove these costs from all electricity bills. Potential savings on typical annual heat pump running costs: about £150.
2. Reduce electricity prices further through electricity system reform
Deliver reforms to maximise savings from a clean power system and publish a comprehensive Electricity Bills Strategy by the end of 2026. This should include continued reform of Contracts for Difference and measures to reduce uncertainty around future transmission network charges. Regulation to prevent unjustified profits from gas plants is also essential. Potential savings on typical annual heat pump running costs: about £90.
Panasonic to expand heat pump giga‑fab in Czech Republic
3. Drive up performance standards for low-carbon heating
Monitor installed heat pump efficiency and set a target to improve average performance by 25 percent, from SCOP 2.8 to SCOP 3.5. Invest in innovation to further raise installed performance and help households with outdated electric heating switch to more efficient options. Potential savings on typical annual heat pump running costs: about £140.
4. Ensure consumers can access cheaper off-peak electricity
Unlock the potential of consumer‑led flexibility by introducing standards to ensure all new electric heating systems are “smart ready”. Strengthen price signals for flexible tariffs and support innovation to automate heat pump load shifting. Ensure households have clear information on selecting the most cost‑effective energy tariff. Potential savings on typical annual heat pump running costs: about £175. (hcn)
